At the beginning of the year, Goldenrod had beginning inventory of 2,000 scooters. Goldenrod estimates it will sell 5,000 units during the first quarter of the current year, with a 10% increase in sales each quarter. It is Goldenrod's policy to maintain an ending inventory equal to 20% of the next quarter's budgeted sales. Each scooter costs $100 to produce and sold for $150. How much is the budgeted sales revenue for the third quarter of the current year?

Question

Business

Choi

3 April, 17:12

At the beginning of the year, Goldenrod had beginning inventory of 2,000 scooters. Goldenrod estimates it will sell 5,000 units during the first quarter of the current year, with a 10% increase in sales each quarter. It is Goldenrod's policy to maintain an ending inventory equal to 20% of the next quarter's budgeted sales. Each scooter costs $100 to produce and sold for $150. How much is the budgeted sales revenue for the third quarter of the current year?

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Deven Guerrero · Answer 1

The budgeted sales revenue for the third quarter of the current year is $907,500

Explanation:

For computing the budgeted sales revenue for the third quarter, first, we have to compute the sales for the first and second quarter which equals to:

First quarter sales revenue = Sales units * sale price

= 5,000 * $150

= $750,000

Second quarter sales revenue = Sales units * sale price

= 5,500 * $150

= $825,000

For second quarter sales units, the units is increased by 10% which means

= 5,000 + 5,000 * 10%

= 5,000 + 500

= 5,500

Third quarter sales revenue = Sales units * sale price

= 6,050 * $150

= $907,500

For third quarter sales units, the units is increased by 10% which means

= 5,500 + 5,500 * 10%

= 5,500 + 550

= 6,050 units

Hence, the budgeted sales revenue for the third quarter of the current year is $907,500